CAVA Group, Inc. (CAVA)

Short-term

Turnover ratios

The activity ratios of CAVA Group, Inc. over the period from 2020 to 2024 reflect several notable trends and inconsistencies worth analyzing.

Inventory turnover showed substantial activity in 2021, with a significant increase to 126.94 from an undefined value in 2020. However, subsequent years experienced a decline: 99.02 in 2022, 97.28 in 2023, and further to 94.99 in 2024. Despite the decrease from the peak, the inventory turnover remains relatively high, indicating efficient inventory management and rapid inventory cycle relative to sales.

Receivables turnover experienced a sharp drop from an exceptionally high 2,329.50 in 2020 to 82.52 in 2021. Thereafter, it declined more modestly to 72.93 in 2022, then gradually decreased to 61.31 in 2023, before rising again to 74.15 in 2024. The initial spike in 2020 appears anomalous and may signify data inconsistency or extraordinary circumstances. The subsequent decline suggests improved collection periods, while the uptick in 2024 indicates a possible slight loosening in receivables collection efficiency.

Payables turnover exhibited a steady increase from 27.87 in 2020 to 35.56 in 2022, reflecting an acceleration in the company's payment cycle to suppliers. After a slight decline to 31.82 in 2023, it decreased further to 28.23 in 2024, suggesting a shortening of the payables period, potentially indicating tighter liquidity management or changes in supplier terms.

Working capital turnover increased from 3.03 in 2020 to 4.87 in 2021, demonstrating improved efficiency in utilizing working capital. Data for 2022 is missing, but in subsequent years, it declined to 2.96 in 2023 before rising again to 3.69 in 2024. These fluctuations imply varying efficiency in managing working capital relative to sales, with recent improvements.

Overall, CAVA Group’s activity ratios indicate a trend toward efficient inventory and receivables management post-2021, with some fluctuations in payables management. The data suggests a focus on optimizing working capital utilization, though certain anomalies and year-to-year variations warrant further scrutiny for consistency and underlying causes.

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Average number of days

The activity ratios of CAVA Group, Inc. reflect the company's management of inventory, receivables, and payables over the period from December 31, 2020, to December 31, 2024.

Days of Inventory on Hand (DOH):
In 2020, the company did not report a specific DOH value. Starting from 2021, there was a notable increase from 2.88 days to 3.69 days in 2022, with a slight upward trend continuing into 2023 and 2024, reaching 3.84 days. This gradual increase indicates a modest extension in the time inventory remains on hand before being sold, which could suggest a slight slowdown in inventory turnover or strategic inventory management adjustments.

Days of Sales Outstanding (DSO):
The DSO was minimal at 0.16 days in 2020, indicating a very efficient receivables collection early on. There was a significant increase in 2021 to 4.42 days, with a continued upward trend in 2022 and 2023, reaching 5.95 days, before decreasing slightly to 4.92 days in 2024. The overall trend suggests that the company experienced some relaxation in receivables collection practices following 2020, although the figures remain relatively low, indicating efficient cash collection compared to industry standards.

Number of Days of Payables:
The period that the company takes to pay its suppliers increased from 13.10 days in 2020 to 12.93 days in 2024, with some fluctuation. Notably, the payables period decreased slightly from 13.10 days to 10.27 days in 2022, then increased again to 11.47 days in 2023, and further to 12.93 days in 2024. This pattern suggests that the company has maintained a generally strategic approach to extending its payables, balancing supplier relationships with working capital management.

Summary:
Overall, CAVA's activity ratios indicate a steady and controlled approach to managing inventory, receivables, and payables over the analyzed period. The slight increases in inventory and receivables days point to marginally longer cycles in these activities but remain within manageable levels. The company’s payables periods have shown a tendency to extend, which can positively impact cash flow while requiring careful supplier relationship management. These ratios collectively suggest a balanced operational approach aimed at maintaining liquidity and operational efficiency.

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Long-term

The long-term activity ratios for CAVA Group, Inc. reveal insights into the company's efficiency in utilizing its assets to generate sales over the specified periods. The Fixed Asset Turnover ratio is notably absent across all examined dates, indicating that data on how effectively the company uses its fixed assets (property, plant, equipment) to produce sales is unavailable or not calculated.

In contrast, the Total Asset Turnover ratio demonstrates some variability over the monitored period. It increased markedly from 0.54 at the close of 2020 to 1.38 at the end of 2021, suggesting a significant improvement in the company's overall efficiency in generating sales from its total assets during that year. However, this ratio then declined to 0.86 by the end of 2022, reflecting a decrease in asset utilization efficiency. The ratio continued to decline slightly in 2023 to 0.74, indicating a modest reduction, but then showed some recovery in 2024, rising to 0.82.

Overall, the trend suggests that the company significantly enhanced its asset utilization efficiency in 2021, followed by a period of diminishing efficiency in the subsequent years. The partial recovery in 2024 indicates some improvement in asset turnover but does not return to the peak levels observed in 2021. The absence of fixed asset turnover data limits a more detailed analysis of specific asset categories, but the total asset turnover trend provides valuable insight into the company's asset utilization performance over these periods.